Japan: Electronic recordkeeping requirements, performance-linked compensation measures under 2021 tax reform

Amendments to electronic preservation systems and performance-linked compensation

Performance-linked compensation measures under 2021 tax reform

The following administrative actions relate to the 2021 tax reform in Japan.

Amendments to electronic preservation systems

The National Tax Agency on 12 November 2021 posted a set of “frequently asked questions” (FAQs) as guidance regarding the amendments to the electronic preservation system for account books under the 2021 tax reform. The FAQs address the rules for:

  • Preservation systems for national tax-related account books and documents by electromagnetic records
  • Scanner preservation systems for national tax-related documents
  • Preservation systems for electromagnetic records related to transaction information of electronic transactions

Amendments to performance-linked compensation

A Cabinet Order (10 November 2021) specifies the effective date of measures introduced under the 2021 tax reform to allow a deduction of certain performance-linked compensation for directors of an unlisted non-family company having investment management as its main business activity.

The amendments are effective for fiscal years beginning in the period from 1 April 2021 through 31 March 2026 and ending on or after the effective date of the amended legislation (22 November 2021).

Read a November 2021 report [PDF 131 KB] prepared by the KPMG member firm in Japan


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